Don’t Make These Mortal Sins When Buying And Financing A Business Purchase Acquisition. Buy A Company Or Competitor .. The Right Way!

Looking for Cutting Edge Advice on Buying And Financing A Business

Information on buying financing a business purchase acquisition in Canada . Buy a company , even a competitor, the right way!



More and more Canadian business owners and managers are looking toward executing and financing a business purchase acquisition. Buying a company, even a competitor has become one way to succeed on a growth strategy. But when you buy a firm are there some secrets to both not overpaying as well as some solid advice on how to finance the acquisition? We think there are.

Naturally the big guys execute acquisitions and mergers almost every day, all day. Valuations, currency, and business politics and competition play a huge role in determining the success of those deals, which we read about everyday.

But how about your transaction in the small to medium size (SME) sector in Canada. How do you access the cash and finance mechanisms that make a transaction work?

Many clients we speak to are looking to maximize on what they feel are ' undervalued' firms, in some cases the company you may be looking at might be in dire straits.


Naturally there are reasons why your acquisition target is undervalued, or in those dire straits we talk about. The reality is that more often than not it’s not just the price or value that you have agreed on, but the post sale cash flow and operations of the acquisition that will make or break your deal.

Where can things many times go wrong is simply when you don't spend enough time on the financials or the careful financing of the purchase. And boy is you committing a grave mortal sin when you overpay for a deal. The concept of overpaying and then not being able to execute on your overall strategy now puts you in... You guessed it... dire straits.

So what are they key areas of ' sinning ' when you buy a firm, from a financial and financing perspective. Naturally, as we have said, valuation is important, as well as a careful study or what you could call ' risk areas'.

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Financing the transaction must have you taking a hard look at profits, cash flow, and how your final balance sheet will look. It's very important to focus in on what cash flow the new company will generate. This is when your new ' economies of scale kick in.

Three other key areas of focus are total new sales growth, what assets are needed in the new combined entity, and how working capital will be financed. This includes growth in receivables, inventories, etc.

Don't get caught in other misconceptions - the concept of 'diversifying ' can sometimes turn into a fiasco. Diversifying into a completely different industry can bring both danger and financial risk. And don't think you can rely totally on the acquired management team to totally achieve your goals. That is up to you and your team!

There you have it, some pitfalls... to avoid when you buy a company through some sort of merger or acquisition process. Speak to a trusted, credible and experienced Canadian business financing advisor for tips and solutions to buying and financing a business in Canada.

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS ACQUISITION FINANCING EXPERTISE



Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/financing_business_purchase_acquisition_buying_buy.html

Looking For Business Purchase Financing In Canada ?. Buying An Existing Company? Finance and Buy Tips .

Benefits And Tips On Canadian Acquisition Financing

Information on business purchase financing in Canada . Buying an existing company ? Tips on how to finance and buy a business.


Business purchase financing. When you or your firm has made the decision about buying an existing business in Canada you need some solid information around how to finance your transaction.

Why buy a business in the first place. Many clients we speak to are fortunate enough to have what we might call an ' inside track' on a company or business that would accept a favorable offer based on current situation.

The obvious benefits around our ability to buy a business that is established already is simply the fact that there’s a revenue stream, a client base, and assets and location that are already in place . That certainly beats a start up scenario and all the work and challenges that go with that.

Also, business purchase financing also has the ability to structure a financing deal with the owner remaining in a subordinate position via a VTB, i.e. a vendor take back. Naturally the skills and expertise of the owner and current management team might also have a significant value to your own efforts to grow the business, at lease for an interim period.

Is it easier to arrange funding for an established business versus an existing business? There's never a clear answer to that one, but many people do believe your chances of success are much higher when you buy an established concern; and if you're a lender looking at a transaction such as this it also means you're more positive than negative, wouldn't one think?

Naturally cash flows and profits of an existing business are positive in the context that you can demonstrate immediate cash flows and profits to repay loan financing. In some cases you might be purchasing a franchise and you will need the support of the franchisor to make that acquisition. Once again the ' branding ' and ' reputation' around that franchise is clearly positive as opposed to negative.

Valuation is a challenge when it comes to both purchase and financing when buying a business. A higher valuation will mean you might have to finance a goodwill component, which is difficult in an asset based transaction. On the other side of the coin we meet clients who are interested in buying a distressed business that has been trending down - valuation is cheap and they believe they can engineer a turnaround. Easier said than done sometimes.

Valuations on the business can be supplied by the owner, or you can arrange your own through a qualified advisor or appraiser. That's particularly important when it comes to an asset based business.

Key issues to consider in the valuation and financing of the business are quality of the financials, revenue trends, cash flow generation - i.e. does the business use cash or throw off cash? ( The latter is better!) You or your accountant and advisor need to ' normalize ' the financials, making the assumptions on how the business costs will look after you take ownership.

In Canada businesses can be financed with term loans, asset based lending, franchise financing if applicable, and even the Government Small Business Loan if its a smaller transaction under 350K.

Speak to a trusted, credible and experienced Canadian business financing advisor on how to properly structure and complete buying a business in Canada.

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS PURCHASE FINANCING EXPERTISE



Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/business_purchase_financing_buying_existing_buy.html

Franchise Financing In Canada . Boring Or What? Franchisee Loan Info In Buying Franchises

Canadian Franchise Financing – Not Exciting .. But ….


Information on franchise financing in Canada. Implications of buying a franchise and the franchisee loan process.


Franchise financing in Canada. Boring... right? Well it might not be if in fact you're a franchisee looking for a loan when buying your franchise.

We're reminded at the same time of Sisyphus, of Greek mythology. He had to roll that boulder up the hill, requiring immense strength and endurance, only to be destined to see the rock fall down and to have to repeat the action in perpetuity. Anyway ... with the right info and contacts you certainly don't have to be a Sisyphus when it comes to franchise finance!

7 Park Avenue Financial - EXPERT FRANCHISE FINANCING



It makes sense that if the franchise that you have chose is in fact part of a successful chain that it will require a probable substantial investment, both in terms of equity as well as the franchisee loan. All businesses are founded with that combo of debt and owner equity.

The positive side of the story is that franchise financing is in fact available and generally viewed as a positive in nature that financing is in fact available. And a well known or reputable franchisor is in fact just the icing on the cake.

Typically the down payment required to open and fund a franchise tends to be anywhere from 10- 50% depending on the structure of the financing you require. While some permanent equity is a must it is to the benefit of yourself and the lender that you demonstrate some working capital and what we can call ' financial cushion ' in case things are off to a slow start. We're reminded of a saying by an old boss we had in the 80’s - he said he never met a forecast he didn’t like!

So what in fact is the franchise loan offering in Canada. Well it’s a combination of bank financing, specialized finance via a commercial finance firm, and then what we call a cobbled together approach of equipment, line of credit, etc.

Many franchisees, once established are considering cash advance financing, which in effect monetizes future sales which are then repaid over time as you generate new sales. They are done on a revolving and or term basis and typically have higher financing rates attached to them.

Most franchisees choose the BIL/CSBF program which is perfectly structured for franchise financing less than and up to 350,000$ with attractive borrowing and criteria features attached to it.

The essentials of any franchise financing requires a solid, preferably ' crisp ' business plan outlining your background, a financial forecast, and info on the franchisor and your chosen industry, whether it is a service or a product.

Typical debt to equity ratios apply , and you want to ensure that amount you borrow is repayable out of operating cash flow. Optimally you want to cover your loan payments, build equity, and of course draw a reasonable salary that you and your family can live on. The appeal to the franchisee is of course the proven business model offered by your franchisor that presents a reasonable, hopefully proven method of generating profits, cash and equity.

So, boring. Maybe, but not if you're on a search to properly finance a major business/career decision in your life. Speak to a trusted, credible and experienced Canadian business financing advisor on how you can access franchise financing in Canada.









Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/franchise_financing_franchisee_loan_buying.html

Pulling The Trigger Successfully On New And Resale Franchise Financing Costs in Canada . Buying And Finance Tips

Financing Restaurants and Other Canadian Franchise Concepts – What You Need To Know



Information on franchise financing in Canada for new and resale franchises. How costs of franchise finance are financed.



Buying a new or resale franchise in Canada? Let's try and show you how you can in effect ' pull the trigger ' successfully on franchise financing those costs.

We read recently that a franchisee/ franchisor relationship is not unlike a marriage between you and the franchise firm that you have selected as your future partner for hopefully... a long time!

Although our focus is on financing it's safe to say that what we refer to as the ' soft issues ' of success in franchising are as exceptionally critical. Typical attributes of a successful franchisee are of course being sales or people oriented, driven to succeed, and are of course committed to working hard and growing their business. Sounds easy, probably isn’t we think!

When it comes to financing you need to be in a position to have thoroughly investigated the financial aspects of the business. That might have included the costs of buying an existing franchise. It might be a company or ' corporate ' store currently held by your franchisor, or simply another franchisee, just like you, who wants to sell their business. Do we even have to mention you probably want to thoroughly investigate why that franchisee is selling, as that decision might be critical to your success!

Various franchisee associations and industry associations exist in Canada, and if you have ever wondered about ' picking someone’s brain ' we'd say that time is now when it comes to exploring the information around the industry itself, its regulation, etc. We would also point out that much of the legislation in the industry seems to significantly favor the franchisee rights, which, if you're a franchisee is a good thing. If you're a franchisor... well... that’s a different story we guess!


Franchise financing costs vary in Canada. You can purchase a small service oriented franchise, or, as many do participate in the Canadian QSR, FSR and Full service restaurant industry. (Quick service, fast service, full service).

In Canada the majority of franchises are financed with a co - signer, in effect the government of Canada! We're hoping these days that they are good for it!!

That's because the government small business loan program, typically called the SBL / BIL or CSBF program finances thousands of franchises.

As we noted in our introduction you can successfully use the program to finance both a new or resale franchise. In the case of buying a resale franchise you want to ensure that you have full financial disclosure from the current owner. That would of course include proper financial statements which would allow you to determine a valuation or proper pricing. This is a great time to enlist the help of an experienced business financing advisor, a lawyer, accountant, banker, etc - simply speaking: Someone to help you make the right decision.

In the case of a resale franchise you need to have a proper valuation done on any hard assets in the business. This can easily be accomplished by using a proper appraiser that can give you a sense of the actual value of the assets you're buying.

In the case of purchasing a resale franchise your transaction must be completed as an asset sale, not a share sale, which is typically difficult to finance if the seller insists on a ' share sale ' of the franchise.

Proper equity from yourself, plus a solid business plan and cash flows, plus some miscellaneous related busines financing application info will allow you to successfully complete franchise financing in Canada. In certain cases, with certain franchisors, you might qualify for financing from a highly specialized franchise finance firm. General financial criteria remain the same when it comes to financing from a non-regulated commercial financing firm such as a leasing company, etc.

At the end of the day successfully ' pulling the trigger' on financing costs for your new business come down to homework by yourself, working with a solid advisor or advisors, and presenting a strong business plan highlighting your experience and business growth potential.

Speak to a trusted, credible and experienced Canadian business financing advisor if you are interested in pursuing financing for a new or resale franchise in the Canadian market.







Stan Prokop - founder of 7 Park Avenue Financial –


http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :


http://www.7parkavenuefinancial.com/franchise_financing_new_costs_buying_resale.html

Buying And Financing A New Franchise In Canada? What Franchising Loan Info Do You Need?

Buying and Financing a Franchise Opportunity In Canada?

Information on financing a new franchise in Canada . Consideration for franchisees who are buying a franchise and looking for the appropriate loan .



Financing a new franchise. Simple? Difficult? Impossible ? Our answer would be ' simple ‘... never, not really. Difficult... we don't think so, you be the judge. Impossible? With the right information and assistance, absolutely not.

So what in fact does a Canadian franchisee need to know about funding a franchise business in the Canadian marketplace? A good start are some of the basics - we're going to assume you have a general knowledge of what franchising is , with an emphasis on the pros and cons of purchasing what is hopefully a proven business model in your chosen industry vertical . That vertical might be QSR (Quick Service Restaurants) (boy are there a lot of those!) service oriented businesses, the growing healthcare industry... and on it goes.

In Canada ( and we're assuming south of the border also!) your personal financial situation as well as you related experience play a key role in the overall financial plan you will undertake to successfully complete a business financing .

A great start is to prepare a personal net worth statement; simply speaking it’s a basic form that shows what you have, and what you owe. The difference is known as your personal net worth. Hopefully what you have is more than what you owe; otherwise your chances of financing success are somewhat slim, if not non existent.

A business plan prepared by yourself or an advisor will hopefully show you have thought out your cash flows and profit potential. Everyone wants to be a ' winner ' in franchising, that’s understood, and it seems only common sense that the more successful a franchising brand you attach yourself to will translate into financial success.

Don't forget also the royalty aspect of your planning. Royalty fees when you purchase a franchise typically tend to be in the 6-8% range, and those fees should be carefully factored into your overall profit and cash flow scenario.

The old adage that the 3 most important things in real estate are location, location, and location! If your business is dependent on retail / consumer traffic that’s important.

Does your lease and location factor into your financing? Yes, it does, as it’s critical that your lease have a term that appropriately matches the term of your franchising loan. Simply speaking, don't expect a 7 term loan if your premises lease only has 3 years left and is not renewable in your favor.

The amount that you are required to invest as your portion of the business capitalization varies. It depends on a couple basic factors. Those factors are as follows:

1. The minimum amount that might be required from the lenders perspective

2. The minimum amount that might be required your franchisors perspective. This is an especially important number because it is usually drawn from their experience as to what amount of capital units in their chain require to be successful.
3. A third factor is the amount of risk you personally are willing to take in your new franchise venture. In this case ' capital ' is what we tell clients could be a double edged sword. For instance, you could put up 100% of the funds yourself. In that case you have little debt risk, but have a lower return on investment. Alternatively borrowing without a decent equity position puts you at the mercy of your franchise lender when things go wrong, as they sometimes do. And need we mention that every business, franchise or otherwise needs a working capital cushion.

It may seem the wrong way of looking at it, but as a Canadian prospective franchisee you might well want to take some time to understand why franchisees fail, and what you need to know to buy and successfully finance a new franchise in Canada.

The importance of a trusted, respected and experienced Canadian business financing advisor can't be underestimated. Whether you are buying a new unit in the system, or purchasing a resale from an existing franchisee understand your reward, and risk.




Stan Prokop - founder of 7 Park Avenue Financial –


http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/financing_a_new_franchise_franchising_loan_buying.html